Traveller’s Cheques? What Are The Modern Day Alternatives?

Jane Wardle

Written by Jane Wardle on February 4, 2019

Updated February 4, 2019

Travellers cheques

Traveller’s cheques have been used in some form or other since at least the late 1700s when Thomas Cook issued them as a way of paying for goods and services abroad. Many people in the UK will be familiar with them, though whether they use them is another matter as, over the last decade or so, they’ve fallen out of favour with travellers who prefer more modern alternatives.

1. Cash

A bank issues Traveller’s cheques as well as building societies, travel agents, the post office or bureau de change before you go abroad in exchange for cash. Generally, people exchange most, if not all, of the money they plan on spending on holiday for traveller’s cheques, which they then exchange back for cash in a local bank.

This worked well in the days before ATMs were common as traveller’s cheques require a signature, so they were considered a safer option than taking the cash itself. Now, you can take out money as and when you need it in the local currency from cash machines, removing the need for traveller’s cheques.

This gives you more flexibility over your budget, reduces the risk of you being left without any money if your traveller’s cheques are stolen and means you are less likely to be left with money left over at the end of your holiday you need to change back (which has a fee attached).

There are often fees or charges attached when you withdraw money from an ATM so check what these are with your bank before you travel and factor them in whenever you take money out.

2. Credit and Debit Cards

Credit cards for travelling

It is rare nowadays to find a business that doesn’t accept debit or credit cards as a form of payment, even if those cards were issued in another country, making them an easy alternative to traveller’s cheques. In some cases, Europe for example, you might be asked if you want to pay in the local currency or your own, meaning you can check how much you are spending against your budget.

Remember, it’s always a good idea to choose the local currency as your bank will probably give you a better exchange rate than the local retailer. Most card companies will charge a fee for using your cards abroad, which can make it expensive if you use them for everyday spending, and you won’t necessarily know the exchange rate until payments are processed, which could take a couple of days.

Let your card company know if you plan on using your card abroad and for how long. Otherwise, you risk your card being denied, which isn’t ideal if you don’t have the cash to pay for your purchases or mobile charges mean you will struggle to get in touch with your bank to rectify the situation.

3. Pre-paid Cards

Pre-paid travel cards are a popular choice

Pre-paid travel cards are a popular choice

Pre-paid cards are a great alternative to credit and debit cards and work in a very similar way apart from you are not spending against your credit limit but a pre-set amount you’ve loaded onto the card. Money can be loaded as pounds sterling or different currencies based on your specific preferences.

The only downside here is you can’t go over this pre-set limit, so you do need to watch your spending somewhat. However, if you have money left over at the end, you can use the cards in the UK, meaning you aren’t going to be paying fees on changing your unspent money back at the end of your holiday.

One of the best things about pre-paid cards is that they are safer than either cash or using your credit cards. They aren’t connected to your bank in any way, meaning that if they’re lost or stolen, your accounts aren’t at risk. Moreover, unlike traveller’s cheques, they are easier to replace if needed (though there is a charge attached to this).

Some pre-paid cards charge additional fees if you withdraw money from an ATM or top them up if you run low on funds. They might also have limits on how long they can be used for. Make sure you understand any terms and conditions before loading up a card and heading on your holidays.

Getting the most from your money

Each of the alternatives to traveller’s cheques listed above has pros and cons attached, and no one will be right for everyone or every situation. It’s a good idea, therefore, to choose a mix of options when it comes to taking money abroad. Cash, for example, is good for smaller purchases and to make sure you can pay for things as soon as you arrive while cards work well for larger purchases such as hotels or tickets to events.

Whichever option(s) you choose, get your travel money before you go as it’s cheaper than exchanging it when you arrive and, when it comes to cards (credit, debit and pre-paid) or traveller’s cheques, take contact details with you to make sure you know whom to speak to if they are lost or stolen.

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